Strategy

How this CFO corrals government incentives for expansion

Forge Nano is taking the federal government up on its incentives to make lithium-ion batteries in the US.
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· 5 min read

There’s been a recent flurry of legislation offering, among other things, green energy incentives and tax benefits for businesses investing in green manufacturing. But taking advantage of those incentives can be confusing and time consuming.

Michael Kleinberg has been the CFO at Forge Nano since 2020. In November, the Denver-area maker of specialized coatings for batteries, semiconductors, and 3D printing machines announced it would expand into making their own batteries with a factory outside Raleigh, North Carolina, with incentives from state and local governments.

Forge Nano is also seeking federal funds through the Bipartisan Infrastructure Law and the Inflation Reduction Act, which provide grants and tax credits for companies that make lithium-ion batteries and other tech.

CFO Brew recently spoke to Kleinberg about how his organization is navigating the labyrinth of government incentives to grow.

This interview has been edited for length and clarity and was conducted via phone and email.

Can you tell us about the factory you’re planning?

We started with a project to put up a battery factory to produce about half a gigawatt worth of cells…[Then,] we started talking about a 1-gigawatt battery factory, which is how we started talking to states about the incentives if we were to locate this 1-gigawatt factory in their locations.

We’ve discovered there’s a lot more demand for this than we originally anticipated. We are now aiming to hopefully get enough capacity into this gigafactory to produce 3 gigawatts of offtake per year.

With this new factory or in general, how do you decide if an incentive is worth it?

Nobody wants to invest in something where somebody’s scattershot and hoping that something will eventually stick—at least not anymore. So we’ve been focused by the funds to which we have access, where we’re finding success and traction. And ultimately, you know, we have a board that tells us what we should be focusing on.

We don’t sit around a meeting and say, “Is this something we can pursue?” We say, “How do we pursue this and not lose our shirts while we’re doing it?” And if we can’t answer that question, we don’t do it. But pursuing these grants, pursuing the battery factory, looking at the cash flow as a result of that, and looking at our ability to serve these markets, it was a no brainer, and so it was something really easy for everybody else to get behind.

How did incentives shape your plans for the project?

We did initially start by talking to states. North Carolina [brought] us a very nice set of state incentives [and] demonstrated what they’re doing to really make sure that we have the labor that we need, the local support that we need, the partnerships that we need within the community. They really knocked us out. [Wake County's community colleges] can design programs that are specifically tailored to our manufacturing process…So we’ve got a nice set of incentives from North Carolina, but it’s also a great place for us to be working.

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But going along to the federal level, we do have two big incentives that we’re pulling on. They are looking for projects that actually produce batteries locally and we are definitely applying for that program. It’s a program for which we seem to be uniquely suited to domestic production. We have the opportunity potentially to get to that 3-gigawatt production level with the help of those infrastructure bill funds. The submission date for this program is in March.

Under the [Bipartisan Infrastructure Law], we’re seeking a grant…for battery manufacturers and those involved in the supply chain for new and existing manufacturing facility development.

Under the [Inflation Reduction Act], we intend to seek reimbursement under Section 45x of the Advanced Manufacturing Production Tax Credit…An extra $35 per kilowatt hour really does get us to a very nice margin where not only can we produce, we see this as a very sustainable operation.

What kinds of public money have you gotten for in the past, and how has that prepared you for seeking federal funds now?

We’ve done about $45 million in grants with the Department of Energy in the Department of Defense over time. Some of our best scientists are people coming out of the National Renewable Energy labs, and these are people [who] really know how to navigate that system of grants and are really familiar with how they all work.

They’ve leveraged their relationships within the Department of Energy community to say, “Look, we’re trying to develop better batteries. What do you have available that could help us out?”

What happens if you don’t get the grants?

We are not assuming that we’re going to get the grant money…We’re assuming that we’re gonna have to finance that somehow. So right now we’re going out to the markets, looking at project finance, and potentially equity as well, to fill in the complete capital stack we need. If the infrastructure bill comes in and hands us that bucket of money, nobody will be happier than our investors.

Update 02/13/2023: This story has been updated to reflect the accurate price of the per kilowatt hour. It is $35, not $10.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.